Jobless claims decline, easing worries

U.S. jobless claims dropped by 31,000 to 473,000 during the week ended Aug. 21, reversing most of the recent increase in job losses, according to The Wall Street Journal.

Claims were declining steadily earlier this year but began increasing again. Claims were at 504,000 for the week ended Aug. 14, which was their highest level in nine months.

Unemployment claims are significantly below their high of 651,000 in March 2009 but remain elevated. This reportedly indicates a weak job market but not a downturn in labor demand.

"Although claims still are uncomfortably high, the reversal after three weeks of large gains is an encouraging sign," says Zach Pandl, economist for Nomura, New York. "In our view, the better-than-expected result significantly lowers the probability of a large decline in private payroll employment during the month."

The number of continuing claims drawn by workers for more than one week in the week ended Aug. 14 fell by 62,000 to 4.46 million. The jobless rate for workers with unemployment insurance for the same week was 3.5 percent, a 0.1 percentage point decrease from the previous week's revised 3.6 percent.